Healthcare Executives – Keep Calm and Be A King for A Day

King for a Day: Winning Strategies in Post-Reform Healthcare

King for a Day: Winning Strategies in Post-Reform Healthcare

David Johnson, 4SightHealth CEO – Great leaders ask great questions. Banner Health’s CEO recently wrote and asked me, “If you were king for a day, what three strategies would you pursue to enable health systems to win in post-reform healthcare?” With Peter’s permission, I’m sharing my response.

Trying to overcome a “planned obsolescence” managerial mindset and respond to voracious Japanese competition, Ford Motor Company launched its “Quality is Job 1” campaign in the early 1980s and turned the company around.

Banner’s strategic decision to be held publically accountable as a “Clinical Quality Company” mirrors Ford’s boldness.

It’s remarkable what organizations can accomplish when metrics and mission align. Banner began measuring “lives saved” relative to APACHE predictive algorithms in 2007. That year Banner saved 224 lives.

When Banner declared its self a clinical quality company in 2009, the number had increased to 527. The big leap occurred in 2011 when saved lives skyrocketed to 1590. Today Banner’s annual “lives saved” exceed 2,000.

Performance improvement is rarely linear. Organizational learning takes time and commitment. Banner’s 2011 breakout performance was years in the making.

By definition, there can only be one “Job 1”. Organizations that don’t give quality primacy can never hit targeted quality, safety and outcomes metrics. Left unopposed, the energy generated from optimizing revenues (Job 1 at most health systems) overwhelms well-meaning quality initiatives.

Shared Decision-Making is a collaborative process that allows patients and their providers to make health care decisions together, taking into account the best scientific evidence available, as well as the patient’s values and preferences. Best-practice SDM incorporates video decision aids and guided conversations that enable patients to understand treatment alternatives and make better medical decisions.

SDM is a trifecta. It results in happier customers; better outcomes and less invasive (and less costly) care. Imagine the reduction in lower-back surgeries if patients were fully-informed regarding relative benefits and risks. SDM has the additional advantage of positioning health systems for increasing consumerism by aligning care delivery with customer wants, needs and desires.

The August issue of Health Affairs reprints a 2012 article chronicling Seattle-based Group Health’s use of video decision aids with 9,515 joint replacement candidates.

As part of an observational study, Group Health physicians treated patients with and without Health Dialog video decision aids. Patients working with the Health Dialog videos, on average, chose less intensive therapies and incurred lower care costs: 26% fewer hip replacements; 38% fewer knee replacements and 12%-21% lower costs.

The results demonstrate SDM’s power. Informed patients are more engaged and appropriately aggressive in making medical decisions. Moreover, giving informed patients the care they want is usually cost-effective.

Health companies that choose not to pursue shared medical decision-making risk alienating customers as meaningful second opinions become more prevalent and clinical outcome and customer quality scores become more transparent.

Beyond this, SDM is the right thing to do for patients/customers.

Emphasize Cost Accounting as Much as Revenue Cycle

All companies seek profits. The means by which they pursue profit reflects economic incentives built into payment systems.

In most industries, companies maximize profitability by creating value for customers. Companies strive for optimal relationships between price, cost and market demand. Customer needs and perceptions are principal considerations.

Apple has become the world’s most profitable company by making desirable products that are affordable and accessible to consumers. Apple also knows its product costs to the penny.

By contrast, health companies employ a regulatory mindset that seeks to maximize revenues (and profits) by finding optimal relationships between volume, payor mix and coding. This managerial orientation has led to an explosion in revenue cycle investment and severe underinvestment in cost accounting. Actual product and service costs are a mystery in many health systems.

Nothing prevents hospitals from tackling performance improvement with advanced cost accounting capabilities. Hoag Orthopedic Institute (HOI) in Irvine, California participates in an Institute for Healthcare Improvement (IHI) and Harvard Business School (HBS) consortium to improve costs and outcomes for total joint replacement surgeries.

Sunshine is the best disinfectant. It’s time to give cost accounting its “day in the sun.” Better performance will follow

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Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog. He serves as the Vice President of Global Services for MiraMed, a global healthcare Business Processing Outsourcing services company. Phil has 25 years of experience in healthcare as an industry thought leader, strategist, solution provider, author and featured speaker. In this blog, you will read about important industry updates, strategies for improving financial performance, and commentary that challenge the status quo.